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Tuesday, 10 February 15
IRON ORE MARKET TO REMAIN OVERSUPPLIED IN 2015: PRICE FORECAST $70/T - WOOD MACKENZIE
 COALspot.com: With January witnessing the price of iron ore falling to its lowest levels since May 2009, Roger Emslie, Principal Metals & Mining Consultant for Wood Mackenzie says there is little to suggest the picture is likely to pick up in 2015 with demand set to remain "slower not lower" and therefore prices will remain low for longer.
Addressing delegates at the Mining Indaba conference in Cape Town, Mr Emslie asserts; "It’s hard to believe, but 2015 has started even worse than 2014 finished. Having commenced January just above US$70 a tonne , the TSI 62% Index was trading at US$62/t by the close of the month resulting in a monthly average of US$67/t CFR – its lowest since May 2009."
According to Wood Mackenzie's iron ore market outlook, demand is unlikely to show any meaningful improvement until late Q1 or early Q2 due to a combination of seasonal and cyclical reasons. Mr Emslie adds: "We have lowered our Q1-15 price forecast to US$67/t CFR and our CY-15 price to US$70/t CFR (basis 62% Fe sinter fines)."
Explaining Wood Mackenzie's short-term outlook in more detail Mr Emslie says: "Iron ore prices may be languishing at their lowest level for nearly six years, but it remains difficult to make a positive case for prices in the short term. Chinese steel mills have cut production in recent weeks due to a combination of weak demand and planned maintenance and this is feeding through directly to iron ore requirements. With the Lunar New Year holidays just a few weeks away Chinese steel production will get worse before it gets better. Steel mills will not re-stock in a falling or stagnant market and when they do there should be plenty of slack in the system, as shown by the high level of inventory held at Chinese mines.
Outside of China the picture is similarly uninspiring due to a combination of seasonal and structural factors. Other than the Middle East and India none of the major iron ore importers have shown any meaningful improvement in demand, a situation that is unlikely to change in the short term."
"The outlook for Q2 is marginally better: Chinese mills should start re-stocking post Lunar New Year, driven by seasonally stronger domestic demand and a pick-up in exports of steel products. This should coincide with slightly tighter seaborne supply as Australian exports reach a temporary plateau and high cost suppliers elsewhere remain out of the market."
Wood Mackenzie warns that if the iron ore price remains in the low $60/t range then more closures from mid-tier producers seem likely and more asset write-downs are a near certainty: "As recent announcements show, there’s only so far that cost cutting can go before difficult decisions need to be taken concerning the long term viability of a mine in a structurally oversupplied market," Mr Emslie adds.
So what led to the collapse in prices? "Australian exports surged ahead by approximately 140 million tonnes (Mt) in 2014 based on investment decisions made several years ago when prices were higher and the long term view was more bullish," says Mr Emslie, "As supply ramped up in 2014, Chinese steel demand did the unthinkable and contracted for the year creating a clear disconnect between supply and demand, marking a decisive turning point for iron ore."
On Chinese imports, which crucially account for 66% of the global total, Mr Emslie says: "2014 finished on a high for Chinese imports (in volume terms not value) with China importing a record 86.9Mt in December." The total value of Chinese imports (in US dollar terms) fell in 2014, despite the volume rising by over 100Mt. Mr Emslie explains; "China’s import bill for iron ore peaked at $112 billion in 2011 (when iron ore prices averaged $168/t) but have subsequently fallen by 16% to $95 billion in 2014. China should see another significant drop in its iron ore import bill in 2015 as significantly lower prices and freight costs more than offset higher volume. We currently forecast a 30Mt rise in Chinese imports of iron ore this year with strong growth in Australian shipments partially offset by price related cutbacks elsewhere."
Pointing to more recent to iron ore news from Australia in January Mr Emslie comments on the impact of sustained oversupply; "The series of announcements and data we've seen provides further evidence of the widening gap between the major miners and the rest of the supply chain. Fourth quarter production reports from Rio Tinto, BHP Billiton and FMG confirm that their low cost expansions are progressing well, paving the way for even higher output in 2015/16." Mr Emslie concludes; "The strong performance of the majors comes at the expense of relatively high cost mid-tier suppliers who are scaling back investment and cutting production in response to low prices and compressed margins."
Iron ore in numbers:
- Iron ore price forecast for Q1 2015 is $67/t CFR.For CY 2015 $70/t CFR (basis 62% Fe sinter fines)
- Global iron ore production 2201 million tonnes (2014)
- Global imports 1404 million tonnes (2014)
- Chinese imports 930 million tonnes (2014)
About Wood Mackenzie
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Tuesday, 24 February 15
IHS ENERGY COAL CONFERENCE OF THE AMERICAS
Attend the IHS Energy Coal Conference of the Americas 17-19 March in Cartagena, Colombia and learn about timely concerns in today's coal indust ...
Monday, 23 February 15
Q2' CFR SOUTH CHINA COAL SWAP FOR Q2 ROSE 3.39% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery rose US$ 1.90 (+3.39%) per MT month over month and declined US$ 0.08 ...
Monday, 23 February 15
Q2' API 5 FOB NEWCASTLE COAL SWAP CLOSED $1 HIGHER THAN Q3
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.12 per MT (+6.44%) month over month and fall US$ 0.43 (-0.83%) w ...
Sunday, 22 February 15
THE BALTIC DRY INDEX LOST ALMOST 3.2% OR 17 POINTS WEEK ON WEEK
COALspot.com: The Baltic Dry Index, one of the economic indicators that monitors the health of the world's economy by tracking the price of shi ...
Friday, 20 February 15
GOVT SET TO INCREASE COAL OUTPUT TARGET THIS YEAR - JAKARTA POST
The Energy and Mineral Resources Ministry is planning to increase its coal output target this year as the government seeks to offset the ongoing de ...
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- GVK Power & Infra Limited - India
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- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
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- Neyveli Lignite Corporation Ltd, - India
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- Parliament of New Zealand
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- Siam City Cement PLC, Thailand
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- Goldman Sachs - Singapore
- VISA Power Limited - India
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
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- Coalindo Energy - Indonesia
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- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
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- MS Steel International - UAE
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- The State Trading Corporation of India Ltd
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
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- Singapore Mercantile Exchange
- India Bulls Power Limited - India
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- Alfred C Toepfer International GmbH - Germany
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- Ministry of Finance - Indonesia
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- Ceylon Electricity Board - Sri Lanka
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
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- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- Salva Resources Pvt Ltd - India
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Thai Mozambique Logistica
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- Global Coal Blending Company Limited - Australia
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- Banpu Public Company Limited - Thailand
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- Price Waterhouse Coopers - Russia
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- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Gujarat Sidhee Cement - India
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Ambuja Cements Ltd - India
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- Sindya Power Generating Company Private Ltd
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
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